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Court in the Act
29 April, 2009  
A chorus of non-recollection

To save you ploughing through 315 pages of mostly bone dry gumph we’ve distilled the rewarding morsels of Justice Ian Gzell’s judgment in the James Hardie case … It’s complete with lots of “feigning” and a company PR man who knows nothing – did nothing … Jonathan Gadir reports


The defendant directors of James Hardie argued that they had not breached their duties in releasing misleading statements about the company’s ability to fully fund its asbestos compensation liabilities.

They denied considering or approving a draft announcement to the Australian Stock Exchange and a press release issued on February 16, 2001.

Both documents contained statements that James Hardie’s Medical Research and Compensation Foundation had sufficient funds to meet all reasonable asbestos compensation claims.

imageJustice Ian Gzell rejected the submissions that the directors never considered or approved the draft ASX announcement and the press release.

His views on the credit of individual witnesses generally were restrained. He preferred to think that they were sometimes “mistaken” in their various denials and inability to recall.

The exception was Meredith (Hellcat) Hellicar (pic), who was found to be “a most unsatisfactory witness”.

The company’s PR man in 2001, Greg Baxter, a former News Ltd hack and now back spinning for Rupe at the newspaper group’s Sydney HQ, wasn’t far behind.

“Mr Baxter said he had no specific recollection of what happened during the course of the 15 February 2001 meeting. He was unable to say that the directors ever saw the press release at any time up to or during the course of the board meeting. He was unable to say that the chairman tabled the press release at the meeting. He was unable to say that the directors took a vote on the resolution. He was unable to say whether a vote was affirmative or negative. He could not recall saying anything about the draft ASX Announcement during the meeting nor was he certain that anyone else said anything about it at the meeting. He thought it was handed around. He did not know who handed it around. He was asked whether he handed it around and he said he probably did. He did not recall whether it was handed to any person during the course of the meeting.”

imageIn other words, Baxter’s evidence was incredible.

To understand how incredible you simply must read the transcript of his withering cross-examination by Bret Walker (pic) (for company lawyer Peter Shafron).

See: The wonderful world of PR.

Justice Gzell was a little more explicit when discussing the directors as a group.

He said he rejected a “chorus of non-recollection” by the defendants who denied they had considered or approved the public announcements.

“It is extraordinary that none of the non-executive directors who gave evidence recalled seeing the document that announced a most significant event in the life of the James Hardie group, an event that they were at pains to ensure was well received by the market…

To feign a lack of recollection was in the interests of non-executive directors. By it they escaped the problem of explaining why, according to them, the document contained material so unequivocal and unqualified that they never would have approved it and yet they raised no complaint about its content…

But the fact of the matter is that they did approve the draft ASX announcement and the receipt of a copy of the final ASX announcement would not have surprised them.”

You wonder what these character did to earn their fees.

The judge had several specific and critical things to say about Meredith Hellicar.

For instance, she denied participating in a teleconference, a few days after the announcement, at which its reception had been discussed.

Phone records showed she did participate in the teleconference. Here’s Gzell:

“When faced with the telephone records, Ms Hellicar was asked whether she adhered to her evidence that she was in Maroochydore in the morning of 20 February 2001. She said:

‘Well, I mean, the phone records would indicate not, but I am flabbergasted at that. I know I have been to several conferences, Maroochydore, at Coolum, so I can only assume I might have been confusing that, but it is odd and, yes, I’ve got, you know, no rational explanation for it other than that I must have been mistaken.’

This incident tells against Ms Hellicar’s credit. It was not the only incident in her testimony that an adamant statement made by her turned out to be wrong.”

On another occasion:

“Ms Hellicar said she was shocked when shown in the course of her cross-examination the allegations made in the Special Commission [Special Commission of Inquiry by David Jackson QC] in relation to Mr Macdonald’s involvement in the final ASX Announcement…

Ms Hellicar knew well before her cross-examination, of the gravity of the allegations raised against Mr Macdonald in the Special Commission. I find that her shock with respect to the document put to her in cross-examination was feigned.”

And then there was the Hellcat’s big mistake – laughing. Gzell again:

“In one incident in particular I found Ms Hellicar’s demeanour to be most unsatisfactory. She had been cross-examined and maintained her statement that she did not sign the September 2004 declaration.

Shortly thereafter she said there was a newspaper article that suggested that she was seeking an indemnity from government. She said:

‘I was so incensed with that allegation, that I actually wrote to ASIC and Costello, the minister, to say: (a) I’m not party to this, I don’t know what’s going on and I don’t want such protections if they are being sought.’

This exchange then took place:

Q. ‘What was the date of that letter – about May?

A. I am not sure. Some time during-

Q. It was in 2005, wasn’t it?

A. It would be in 2005. It will be on ASIC’s records, I’m sure.

Q. And it is-

A. It was a letter I signed.’

There was laughter in court and Ms Hellicar smiled broadly. The cross-examination continued:

Q. ‘Is that comment intended to suggest that the serious declaration which you provided to a company of which you were a director was not something to be taken seriously?

A. No, its meant to convey that I’m pretty sure that it would have been sent.

Q. That was an offhand comment wasn’t it-

A. I am sorry.

Q. – to convey to his Honour that you only take seriously things you sign rather than declarations you provide?

A. No.

Q. Without qualification to a board of which you are a member?

A. I apologise if it was disrespectful. It was only meant to mean that I’m pretty sure it was sent because I remember-

Q. You laugh off-

A. I signed it.

Q. You try and laugh off that declaration?

A. I didn’t laugh. I didn’t laugh.

Q. You laughed-

A. No.’

I have set out at some length some of the incidents in the testimony of Ms Hellicar because I have grave doubts about her evidence and that may have some relevance to the exoneration provisions that are invoked on her behalf.

There was a dogmatism in her testimony that I do not accept. She was proved to be inaccurate on a number occasions. I found Ms Hellicar to be a most unsatisfactory witness.”

Penalties are yet to be determined. James Hardie says it is considering an appeal.

Will The Henderson Institute be the same without Hellcat Hellicar?

Full judgment